Credit Card Debt Problems. Debt consolidation.

Credit Card Debt  | Debt consolidation |  Interest Free Credit Cards  |  Bankruptcy |  Debt Agreements



Are you really, really serious about paying off your credit cards and get these credit card companies out of your life for once and for all - or are you happy to give these blood suckers money for the rest of your life and then have your kids have to give them money from the settlement of your estate when you die?

How does the unenviable prospect of taking yet another 30 years to pay out your credit card debts appeal to you?

Yep - about the same to me.

The wonderful credit card companies would absolutely love you to death (literally) but that's what could happen if you choose to only make the minimum credit card monthly repayments. Most credit card interest rates are at least three times the rate you pay on your mortgage!

You really must understand that the credit card companies in Australia don't allow you to pay back your credit card debt in small amounts out of the kindness of their hearts. This is the very basic way that they make their money and enslave you forever. Paying the minimum payment each month, guarantees that you will be filling the credit card company's cash coffers with your hard-earned money for many years to come.


A friend of our brought us his credit card (July 2012) because he knew of our interest in this subject and asked us just where he stood. He owed a staggering $31929 and was paying an effective interest rate of 19.74% on purchases and 20.49% on cash advances (and they say Ned Kelly died years ago!)

His minimum repayment was $868. So what happens if he paid just the minimum repayment? Well it would take him 32 years to pay off the credit card and he would pay $48896.39 in INTEREST.

If he paid $1621.56 a month (yes we know - a struggle but nothing comes easy in this game) he'd be finished with the whole ghastly thing in 2 years and would pay $6633.54 in interest - a saving of $42262.85

A lot of people think "fine...I'll play them at their own game and get a 12 month interest free credit card and then in another year I'll switch to another interest free one and so on". Play them at their own game? Wrong. To play the game you need to know the rules. You don't really think they haven't thought of that? If you do that you'll be charged the full interest from the previous year - uh oh - READ THE TERMS AND CONDITIONS BEFORE YOU SIGN UP.

Here's where you start: refuse to pay the minimum amount. Demand of yourself that you pay much more than the minimum amount. Yes - DEMAND it of yourself. If you can't pay the minimum amount you should NEVER have bought whatever it was in the first place - regardless of whether it was a new TV, sound system, carpets for the house - that is IRRELEVANT.

The payments you make in the "minimum monthly amount" includes an enormous amount of interest and just a little bit of the principal which is why it takes years and years and years to pay off the original debt.

Do you really want to end up paying $7000 for that big screen TV that was priced at $2000? Well that's exactly what will happen if you continue to make the minimum monthly repayments. No wonder it feels like you can never get ahead.

UNDERSTAND THIS: Getting out of credit card debt is not an easy road. It is quite hard and takes time and effort but that effort will be richly rewarded with the new lifestyle you will achieve in a relatively small space of time. Just two or three years of concentrated effort should pull it up. How long does it seem like to you from Xmas three years ago?

Reining in your spending (reducing lifestyle) is NOT fun. But you MUST do it to make any progress. The only other way out is winning lotto (remote possibility) of getting an inheritance windfall from a long lost aunty - but even if that did happen, you'd soon be back in the same situation all over again with blown out credit cards - just read the many horror stories of many "lucky lotto winners".

Here are some POSITIVE steps you can take:


Refuse to spend any more money and try and catch up. Become a non consumer - try everything you can NOT to be suckered in to the consumer society. Make it a new sub religion.

Don't consume any more than you absolutely need to survive. Ignore all the ads on TV - endless aren't they? - that are there just to entice you to spend money and add to your credit card debt. Don't watch the stupid things.

Watch non commercial TV instead if you have to - yes, I know the programmes aren't always mainstream, but variety is the spice of life. And by refusing to be brainwashed any more by commercial TV, you will end up spending less.

You don't have to have the latest IPad to make your life complete. You can only wear one shirt at a time. You can only eat one meal at a time.

If you do have an unexpected gain, pay it off the credit card with the highest interest rate. You don't know the interest rates on all your credit cards and store credit cards? Why not? Can't you read the credit card statement they send you every month or download to your email account every month?

If you really don't know how much your credit cards are costing you, you are doomed to spend the rest of your life paying off money to keep credit card company bosses in the fine style to which they have become accustomed.

They live in grand mansions with heated swimming pools while you battle it out on struggle street. Who's the sucker? When was the last time one of these high flying corporate executives sent you a Xmas card or invited you over to their mansion (you're paying for it) for a Sunday afternoon barbeque?

Stop supporting their credit card enriched lifestyles and start improving yours.

Most of things you think you'd like to have can be bought later on if you decide you really must have them. You don't HAVE to put them on your credit card. If you need proof that a lot of those "must have" items are a waste of money, have a look at the bottom shelf of your kitchen cupboards. All those electrical appliances and gizmos that you never use any more?

Just because something is on sale doesn't mean that you need it and the world is NEVER going to run out of "up to 70% off sales". They're there for the suckers - always will be.

You have been brainwashed for years and years by all the radio, TV, newspaper and billboard adverting into a life of buy, buy, buy - use your credit card, have it now - why wait?. Accept that is so. Think clearly about it and decide to become a non consumer at all costs. Think about this: at the end of the day you will probably end up in a small hospital/hospice room that has a bed, TV and a small white cupboard beside the bed. Where are you going to put all the "stuff" then?


Save the credit card that costs you the least in interest and cut the rest up. No, not speaking metaphorically - REALLY cut the other credit cards up. You don't need them. I know, your head says Ï should keep them just in case even if I don't spend on them". Wrong!

You will soon end up back in the good old ways and your credit card debt problem will go on and on in to the foreseeable future. Is that what you really want? If it is, why the hell are you bothering to read this page then?

The smartest move you'll ever make in the battle against credit card debt is to minimise the number of cards you have. Remember, if you want to buy a house or refinance a house, your credit score is based on the TOTAL OF THE CREDIT CARD LIMITS you hold. Note: they don't care how little you owe on them, they only count up the maximum limits on the credit cards and you will find you are ineligible for housing loans if you have a large total of maximums on the credit cards you hold.

Another consideration is to maybe keep the oldest credit card you have as length of credit history is one of the components "they" use in assessing your credit worthiness in those reports they do on you when you are asking for credit or a bank loan. By closing only your newest credit cards first, you make your average credit card history older which is a good thing from the lender's point of view.


To make sure you don't keep impulsively splurging on the credit card you decide to keep, put it in a three quarter filled plastic cup of water and put it in your freezer. In that way it freezes solid and needs at least 12 hours at room temperature (probably 24) to thaw it out so you can use it. No, it won't "ruin it". However, be warned, trying to thaw it out in the microwave will wreck the card and make it useless.

In this way you will at least have a day to reconsider if you want to put that new "must have"on the credit card.


Look at what the minimum payment is on each credit card you have. Divide it by four and set up an electronic payment schedule so it automatically gets paid from your bank account every week to the credit card provider. In this way you will pay less interest on your credit card as the amount charged is on a daily basis. Now I know it is a pain in the proverbial to set it up but once it is done, it's done and WILL save you lots of interest in the long term. A few keystrokes - come on! And you can change the amounts as you need to. Just do it. Your credit card interest will reduce significantly if you do.


Shop around for credit cards offering exceptionally low interest rates and transfer the amount owing on your high interest rate cards to them. DO NOT then refill the credit cards you pay off. CUT THEM UP and throw them away.

If you can, there are heaps of people out there offering to refinance and consolidate your credit cards in to one amount, generally with an attractive 6 to 12 month interest rate - this is probably your last chance to get on top of things in this introductory rate period so don't waste the opportunity.

Spend the next 6 to 12 months doing nothing else but paying off this refinanced credit card amount. I know, 6 to 12 months of doing little else doesn't sound so appealing. But think about it - I am writing this in June - last Xmas seems a very short time ago. That is exactly how long it will seem when you get to the end of it. More on debt consolidation below.


Put the one card you kept away in a safe but difficult to get at place for emergencies. You may just need it in the future. But use it only for real emergencies. A new wardrobe is NOT an emergency. A failed hot water system is. A new IPad is NOT an emergency. A blown up car motor is.


Total the money you spend each month paying off those credit cards - wow - wouldn't it be great to have that fun amount to play with every month. Well that's what you will have once you get rid of that accursed debt. Be single minded about this.

Think of all the good things you and your family could do once a little bit of time passes AFTER you pay off those accursed things. And you could pay cash for them - not value plus 18 to 22%. Other people do this so why can't you?

6. WARNING SIGNS OF TOO MUCH CREDIT CARD DEBT: (Warning Will Robinson - warning - warning!) 

a) You don't even know how much credit card debt you are in.

b) You have at least one credit card that is at or over the limit

c) You only make the minimum payment each month on the credit cards

d) You believe you are only one good Tattslotto win from fixing it all up

e)You use cash advances to sustain your lifestyle

f) You lie to friends and family about your debt or, MORE IMPORTANTLY, you lie to yourself about it.

g) Your credit cards are more than 70% of their credit card limit


Grab a bill from any account charging you more than, say, 14% interest. Dial the toll-free number on the bill and ask to have your rate reduced -- say, to 11%. Tell them that you'd really like to stay with them out of customer loyalty (embellish according to your acting skills), but that you have received offers for much-lower-rate or interest free transfer debt cards.

Expect to be made to feel very uncomfortable, but stand firm and remember that, to them, you are both a customer and a cash cow. That's right - you are their profit centre and if they can't stop dipping in to your pocket every month. they go broke as well. And they don't want now do they? Gosh, how would they ever keep up the golf club memberships?

You also stand to save a bundle. Remember the more calls you make, the more persuasive you'll become and the better you will become at this game. And don't think to yourself, "oh I could never pull that off", you would be amazed how many people do. And they are people just like you. And me. And yes I have done it. It does work. Just like sex, once you do it the first time it kind of comes naturally.

If you never ring them and ask, you'll never know what they would have said! And what's the worst possible outcome from the credit card company? So they say no.... big deal!


As you pay down the amount owing on each credit card, make a point of reducing the limit to match the amount owed as it gets less and less. In that way, you will not be able to book up more debt on the cards.

Yes, it a pain in the proverbial doing this on a regular basis but as you do it, you will come to realise just how much in debt you are and how much these credit card companies have been taking advantage if your credit addiction to feather their own well lined corporate nests.


One of the smartest moves you can make is to tell the credit card companies involved that you are in strife and need help. The last thing they want to do is have to deal with other Australian companies that do Debt Relief Management Agreements or the Official Receiver In Bankruptcy. Those are bad options for any credit card company with only the certainty of loss as a result for them and they will generally go out of their way to help you overcome your problems as there is then still some chance of profit.

Ring them up and tell them if you really are at the desperation/no possible other options stage.


This really only works to your advantage IF you don't own real estate / shares etc etc. IF you own property you may be forced to sell it all up when you go bankrupt. The period of your bankruptcy in Australia is generally three years but they can extend this if they believe you have not made a genuine effort to satisfy your creditors BUT it does stop the generally unpleasant bill collectors dead in their tracks.

There is a permanent record kept of your bankruptcy called the National Personal Insolvency Index which people can access on the payment of a fee. There are some restrictions on what you can do during the three year period but you can get full details on this online - just Google in "bankruptcy".

Remember too that during the three year period your creditors are able to take and sell any assets you acquire INCLUDING any inheritances and, strictly speaking, you won't be able to hold a job that involves dealing with money.

By the way, bankruptcy does not always solve the problem. If you are a compulsive spender / big noter / show off, you will be back in the same situation shortly after the bankruptcy period expires - so what's the point? Solve the underlying problems first for a long lasting solution problem to credit card debt.


The best way is through debt consolidation loans and then making a genuine change in your lifestyle patterns and get it paid off as soon as possible. There are companies that work on your behalf to arrange Debt Agreements between yourself and the credit card companies and others you owe money to. They freeze the interest owed on all your debts (a killer in the whole process) and it will then take, on average, three to four years to pay the whole lot off. IT does, again, stop the debt collector in their tracks.

One of the pitfalls, and yes, there are pitfalls (they don't do this for the fun of it) is that if you default on one of the arranged payments, they then will often advise you to go bankrupt anyway and then you will have paid them their fee for two fifths of three quarters of nothing.

Many Australian companies advertise their services - yes, they make money out of you as well, but not as much as the credit card companies, and you get peace of mind to boot. But, you MUST make the payments you agree to or it is a waste of time and only a fool wastes time.


This is really quite a simple affair as the credit card companies can hardly wait to get you in their clutches again. Pay all your phone and telephone bills and rent etc right on time for 6 to twelve months and then go to someone like Radio Rentals and rent a TV for 6 months (whether you need it or not). Pay this every month on time and then you have them for a credit reference in the future.

Do this with a few small store accounts etc etc and your credit rating will soon be back up to A+. But of course this time you will be in control of your credit card debt addiction and be able to control it with the value of hard earned hindsight. won't you?.


If you are in a relationship/family situation, everyone has to be 100% committed to getting out of credit card debt. They all must be rowing in the same direction or a) it won't work and b) it WILL lead to very large arguments as you will justifiably feel that you are the only one who's rowing the debt boat and they are just there for the free ride. Make sure you have everyone else committed to doing the same thing BEFORE you start your get debt free journey.


People in general ALWAYS TEND TO think that the "good life" is always on the VERY next level up to where they personally exist AT THE MOMENT.
Read that again and please absorb it. People in general ALWAYS TEND TO think that the "good life" is always on the VERY next level up to where they personally exist AT THE MOMENT.

So does having stacks of money (and "stuff") make you happy or is it having more money than the next person what makes you happier?
Perhaps out of our primeval past comes the urge to show that we're better than others. 100,000 years ago, it would have given us happiness to have more animal skins than the troglodyte in the next cave. This would of course help ensure mating prospects, which would keep our genetic lines going.

This is not to say there is something strange or peculiar about measuring our success with money.

US President Theodore Roosevelt was a pretty smart dude. His words: "happiness is not in the mere possession of money; it lies in the joy of achievement, in the thrill of creative effort.”


A. I will lose my job and not be able to earn money. TRUE

This fear can hold us back in a lots and lots of ways. We feel that we're simply stuck in day to day boring jobs that we hate because those jobs, at least, feel secure. It's important to have a back up plan to that boring day job if the worst case world economic scenario does happen. Simply having that plan will help you control that fear of job insecurity.

B. I can never accumulate enough money: TRUE

Many people worry that they'll work hard all their lives and have absolutely nothing to show for it. They fear that they will never get out from under the massive amount of debt, both bank and credit card, that they’ve accrued through buying a house and raising a family. If this is you it is important to change your mindset and reassure yourself that you do already have enough money.
Learn to live within the income that you currently have because, quite simply, there's no way to know what the future will hold and you cannot assume that your current income level will rise with the passing of time.. Whatever you have - live within that amount.

C . The fear of having money: TRUE

A lot of people have an underlying fear of what would happen if we actually did have an abundance of money.....usually an unconscious one and one that they never discuss with other people. It manifests itself in the belief that if we really had a lot of money and we would not actually know what to do with ourselves and feel devalued if we didn’t have to work for our money. Some gamblers actually sabotage themselves financially because of this unacknowledged fear.

D. The world's economy is going to hell in a basket. UNKNOWN

No one knows this for sure but a lot of the world's leading economists are leaving their jobs in droves according to the economic doomsday sites that abound in 2012. Having the Euro disaster stories on every night in the news doesn't exactly help people to have confidence in the future.

E. People will think poorly of me if I don't have money. FALSE

People have a lot of irrational fears about how other people will see them because of money. They fear that people will think less of them if they don’t have enough money or even will think they’re snobby if they DO have too much money. Think about it - do you really feel differently about your friends if they are going through a rough patch? If you do, you're not much of a friend and people would probably be better off without you. (Harsh but TRUE).
Address your fears and learn to separate your self worth from the money that you have in your bank account - whatever that amount may happen to be. In the end you have to decide what you think is important to have in your life regardless of how much it costs.
No one has ever been able to "take it with them" - not even Kerry Packer could work that one out and if it could be done, he would have been the one to have found it!

F. Most people just fill their lives with clutter. TRUE

The latest iphone, the latest tablet, the latest digital video camera, newest big screen TV, even a 3D TV, just clutter and all adding to enormous personal debt. At the very end of the day remember this: you generally end up in one nursing home / hospital room with one bed and a small white bedside cupboard where they put your underwear. NOTHING else. All the "stuff" you accumulate during your life will generally end up in a general auction, being sold off by your relatives for one tenth of what you paid for them.

G. Money doesn't buy happiness. FALSE

Despite all the feel gooders comments you read, money does buy happiness because it makes everything just that little bit easier. BUT - (and we strongly emphasise this) - it DOES depend on what your definition of happiness is. You can have more money as well by doing fewer things and slowing down a bit - everything doesn't have to be achieved today. It is more likely than not that the sun will rise tomorrow.


Benefits that you MAY get out of it:

A lower interest rate

One loan with only one repayment (but will you REALLY make it EVERYmonth?)

Lower repayments

Getting back the control of your debts sooner rather than battling it out for decades (literally)

Unlike banruptcy, debt consolidation's osle purpose is to pay off the existing debts in a non traumatic manner with less lasting effects in a process where it takes all of your debts like credit card balances, overdrafts, store cards etc etc and consolidating it into one, low-interest, loan.

One of the problems with trying to pay off all your credit cards is that they allow you to accumulate even more debt along the way. Debt consolidation loans do not have a further credit facility. Debt consolidation loans are a single lump sum that you are obliged to pay back in total.


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